Tales and Opinion from the Front End of Credit Broking

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This morning three conversations have made me think of the endless optimism and faith in divine intervention.

All three have gone much like this conversation which typified the issue:

Me: “Hello I’m calling because I am in your area next week and wondered if I could visit to discuss secured loans with April the 1st in mind”

Broker: “why?”

Me: “Well if you write mortgages then secured loans will have to become a feature of your decision making from April the 1st with FCA taking over regulation of the product. Even if you don’t use secured loans, you will need to demonstrate they have been considered”

Broker ” Not interested mate, I’ve never done a secured loan, and I have no plans to do so. Click”.

Oh the “click” was the sound of the phone hanging up, not some sort of maniac verbal idiosyncrasy that one might as a suffix to a sentence definable by its ignorance and insanity. A click that signified “rebuttal not welcome”.

Insanity aside, practices taking this view are surely incubating an egg that will hatch into a nightmare legacy.

FCA “So you re-mortgaged your client to a higher rate and they paid a 6% exit penalty? Why?”

Broker “They wanted a further £50,000 and their current lender would not agree to a further advance”

FCA “Did you consider a secured loan?”

Is this the moment a broker’s professional life flashes before his or her eyes? A slow motion car crash moment as the words formulate from a mouth that had previously rebuked a hundred loan packagers, those words that had condemned a hundred conversations to be ended by an abrupt “click”, those words that will now condemn and confound their predicament “I don’t do secured loans”.

The “oh god” moment, the family fortunes negative buzzer moment, a hundred conversations flashing through his mind, “I can help you with secured loans” click “We do secured loans” click “have you thought about secured..” click “Secured…” click “hey honey let’s have sec…”click.

CLICK. CLICK CLICK.

It reminds me of an old joke where a devout christian ends up capsized on his boat in the middle of an ocean. After an hour a lifeboat shows up, “don’t worry he says” rejecting the assistance “my god will save me”. Two hours later a cruise ship passes by, “don’t worry, my god will save me”, four more hours a trawler “don’t worry, my god will save me.”

6 hours later, the devout christian is drowned, his first words to St Peter are “why didn’t you save me? I go to church every sunday, where were you?”

To which St Peter replies: “We sent you a bloody lifeboat, a cruise ship and a trawler, what more do you flaming well want?”

Therein is the crux of the matter, when brokers inevitably fall foul of FCA compliance for not looking to secured loans, will they be saying; “Where was my help with the product” or “nobody helped me”?

Having read this excellent blog from my contemporary; Bradley Moore at Brightstar: http://www.bestadvice.co.uk/much-evidence-ignore/ I came away with a sense of frustration, which has subsequently developed into a need to evangelise. My frustration came from this phrase:

“Only last week, I was talking to a very respected industry figure with responsibility for his firm’s stance of all things lending related. When the subject of second charge lending came up, he told me that their brokers were told not to engage”

There is certainly a schism within the mortgage broking field, a distinct step between those who embrace second charge secured loans as a viable tool to assist their clients in the short to medium term, and those who think that secured loans are a product akin to introducing Sauron to Middle Earth, wreaking financial ruin upon a previously happy client.

It’s a serious question, I read an article today that left me bereft as to why anyone would begin to consider this career choice if they knew what a battering they would take on a yearly basis from lenders and regulators on an annual basis.

Here is that article http://www.moneymarketing.co.uk/2006554.article?cmpid=pmalert_133747

The article, from the respected Money Marketing journal states that since 2010 “Lenders have kicked at least 676 mortgage broker firms off their panels over the past four years.”

You could take the view that this is an overdue purge of the industry whereby rogue brokers are being rooted out by lenders. This of course is to be welcomed with open arms, the secured loan industry would of course benefit from this sweep also. However scrape the veneer of the story away and speak to a mortgage broker and some of the reasons “where major lenders have refused to give…

So 2014 is bidding farewell to it’s first month and the scent of optimism is in the air.

Indications that the economy is finally on the up and up, a new housebuilding programme being mooted, house prices on an upward trend and deposit help for first time buyers.

A good time to broking mortgages, and we al know a builder right?

Surely a great time to be a builder, developer or architect too right? The sound of rusty trowels, setsquares and spirit levels being picked up from yards, storage and drawing boards fills the air like spring birdsong, or at least it should.

If you are a mortgage broker, IFA, or indeed an introducer of finance leads, you will no doubt face a deluge of packagers calling you on a daily basis offering you their wares.

Each call a different shade of drab grey until come the end of the week you’ve experienced fifty different shades of the same grey prattle. Fifty shades of grey that have as much excitement and sex appeal as a Dulux grey colour chart, with nothing to skip a heartbeat, race a pulse or twitch a hormone.

Same old “I want to build a rapport with you.”… “Did you know that secured loans are an alternative to remortgages?”… “Use our software meaning you never need to speak to a human again to do business”… “Did you know rates start from 5 point whatever” … “blah, blah, blah”…

Often times when pitching for new secured loan business we hear sentiments to the effect of “my commission is adequate”.

Adequate is fine, run of the mill, mundane, not very exciting is it?

Imagine if your spouse described you as an “adequate” partner? How would you feel?

Do you look into the eyes of your children and think of them as “adequate”? That’s the kind of connection that makes a kid grow up and write a book called “A Child Called Adequate”.

Does Hallmark make Mothers’/ Fathers’ Day Cards bearing the slogan “To an acceptable Mum/Dad”

We demand more from the important things in our lives, we set high expectations, we draw pride from our family lives, equally most of us draw pride from our professional lives…otherwise why do we do it?

Your clients set high expectations from you, so isn’t it about time, as a broker the lifeblood of…